Why the smart money should shift to the UK games sector

Guardian Web |

Facebook UK’s headquarters is hardly a stranger to creative thinking, but the air was crackling with inspiration at the launch of Creative England’s 50 ( CE50 ) 2018 in central London.

The annual event highlights the best upcoming innovators and businesses from the world of games, film, television, virtual reality (VR) and digital media.

Entrepreneurs from across England – from Newcastle to Redruth, Liverpool to Colchester – gathered to celebrate the variety of talent in the creative industry.

Creative England is a not-for-profit champion of the sector, which has so far invested £20m into digital technology companies. Chief executive Caroline Norbury said: “We shine a light on 50 really interesting, innovative businesses that are at the very forefront of creativity and look at some key individuals we think are really going to make a difference.”

One of the keynote speakers at Creative England Live was games industry legend Ian Livingstone. Co-founder of Games Workshop, he launched role-playing phenomenon Dungeons & Dragons in Europe and headed up video game publisher Eidos when it launched Lara Croft to the world with the game Tomb Raider.

He now invests in startup games studios, as well as sitting on the board of Creative England and Sumo Group, but is frustrated at how the gaming industry is perceived. “There are fantastic British success stories that are going largely unnoticed,” he said. “Games are socially, culturally and economically important, but the perception is often negative, with critics saying that games are trivial at best and harmful at worst.

“Yet if you think about what’s happening when you play a game – problem-solving, strategic planning, learning to fail in a safe environment, and exploring creativity in games such as Minecraft – in many ways they are a contextual hub for learning while having fun.

Not only that, said Livingstone, but games are “an economic powerhouse: a global industry worth $110bn in software sales alone – set to rise to $220bn by 2022 – with 2.2 billion players, 10 million new players every week and with an average playing age of 33 for men and 37 for women, hardly just child’s play.”

So what does the industry need? Livingstone said: “Investment. IP [intellectual property] is an intangible asset that investors struggle to value. To enable better access to finance, ideally there needs to be a forum where investors can meet innovators to better understand each other’s worlds.”

Just 2.2% of games studios get venture capital funding in the UK and, said Livingstone, “while seed-funding or angel investment from the likes of Creative England has been really useful, going from that initial investment to VC funding is still a big challenge, and many games companies fail or are unable to scale due to a lack of finance.

“There is a history of blockbuster games being developed in the UK; just look at Grand Theft Auto 5, which launched in 2013 and generated $1bn in its first week, and there are some British games companies you’ve never heard of generating millions of dollars a day from their mobile phone games. The games industry ticks all the right boxes for the UK’s industrial strategy – regional, high growth, transferable skills and digital exports – an industry in which small teams can generate hundreds of millions of pounds globally.”

Elsewhere at Facebook HQ, there was some intense networking going on.

As Norbury said: “Creative England was founded on the belief that talent is everywhere in our nation, but we all know that success isn’t just about talent – it’s also about being in the right network, having the right funding and capital at your disposal and accessing the most profitable markets.”

She said that whittling the CE50 list down to just 50 was tough.

Firms included Landmrk, which allows brands to place digital content in real locations. It recently teamed up with pop star Shakira for the launch of her latest album to allow fans to download exclusive content if they travelled to specific locations.

Another is Knowle West Media Centre, which helps individuals and communities get the most out of digital technologies and the arts.

As Norbury pointed out, one of the unique qualities of the creative sector is there are literally thousands of companies striving to make a name for themselves, which means inclusion in the CE50 can be a great boost for growing businesses.

“In 2016 the creative industries added £92bn to our economy but, unlike many other sectors, that wasn’t driven by a handful of corporate giants but 280,000 separate businesses spread across the country,” she said.

“That’s the challenge for anyone setting out to frame policies for our creative industries; how to cope with multiplicity of small-scale units in a very disparate sector.”

So what’s the best way to go about it? “We have to start with people and that’s exactly what CE50, our annual snapshot of some of the most interesting and innovative companies, is all about,” she said. “Our creative sector has the ability to generate prosperity, jobs, boost communities and to do it in a way that is more inclusive and therefore more truly successful than any other industry sector.

“I am seeing a change in attitude to the industry in some areas. Particularly in the government and the British Business Bank, which is more responsive to these types of business.”

But, she admitted, there is still some way to go. “With the average bank manager – if there is such a thing – there is still a really low level of understanding, even suspicion, and an inability to visualise why something like [VR company and former CE50 nominee] Hammerhead VR could be a business.”

All these things, she said, combine to make it very difficult for creatively focused outfits to attract crucial investment.

Follow @creativeengland and @ian_livingstone on Twitter

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